Italian Bank Shares Tank on ECB Bond Buying Pleas

Shares in Italy's largest banks, including Unicredit, Intesa SanPaolo and Banca Monte dei Paschi di Siena, have fallen sharply Monday after the head of Italy's banking association and its biggest industry lobbies called on the European Central Bank (ECB) buy bonds.

After Italian banks shares were halted for some of today's trading session, Unicredit, Intesa SanPaolo and Banca Monte dei Paschi di Siena stocks fell by over 10 percent as of 1400 GMT, on investor fears that the banks are finding it difficult to shore up capital.

In a joint letter to European Union officials, the heads of banking association ABI, insurance lobby Ania, employers' lobby Confindustria and other industry groups called for the ECB to act to ensure market liquidity and resume buying bonds on the secondary market.

In line with recent pleas for the Europe to become more unified and to adopt a common regulatory framework, the letter was sent ahead of the Thursday and Friday EU summit to European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso.

According to unnamed sources in a Reuters report, the group could be the first Italian bank to resort to state aid, as it is in active talks with the Treasury and the Bank of Italy for a capital fix, in the form of bonds.